Evaluating Berkshire Hathaway’s Stock Performance Below $465

August 14, 2024 12:00 AM PDT | By Team Kalkine Media

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Berkshire Hathaway's stock has seen a notable increase of over 20% in the past year and is now close to its peak value.
The stock currently trades around 3% under its historical high, despite the impact of inflation, high interest rates, and global uncertainties on the broader market.
The stock's current value is below Wall Street's projected range, prompting questions about its future performance and potential growth.

Berkshire Hathaway (BRK.A) (BRK.B) has experienced impressive gains of more than 20% over the last year and is trading just shy of its peak value. This growth occurred even amid economic challenges such as inflation, rising interest rates, and international tensions that have affected other markets.

While some might hesitate to chase this upward trend, it’s worth noting that Berkshire Hathaway’s Class B shares are still priced below the target range projected by analysts, which is between $465 and $506. This prompts a discussion on whether it might be advantageous to consider adding financial stocks to one's holdings in this well-established company before it hits the lower end of that range. Berkshire Hathaway's strength lies in its diversified business model. Founded by Warren Buffett, the company started as a textile manufacturer in 1962. By 1965, Buffett had fully acquired the company, dissolved its textile operations, and redirected its focus towards building a diverse conglomerate.

Initially, Berkshire Hathaway concentrated on acquiring insurance companies with substantial cash reserves. Today, it owns several prominent insurers, including GEICO, Gen Re, and Alleghany. In 2023, these insurance operations contributed 40% of the company's total operating income. The remaining 60% of earnings are derived from various other subsidiaries in sectors such as railroads, utilities, energy, and consumer goods.

Examining the performance of these core businesses over the past two years reveals how Berkshire Hathaway has maintained its resilience and diversified revenue streams, contributing to its robust financial health.

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